FCW mulls development of Segambut land

KUALA LUMPUR: FCW Holdings Bhd is finally taking a step forward to unlock the value of its Jalan Segambut land. It is now in the early planning stages of building a mixed development on the 16-acre tract.

"At this point in time nothing is firm but we are considering our plans and options. It'll probably be a mix of commercial and residential, but once we have firmed up our plans we'll make the necessary announcements," Thor Poh Seng, non-executive director of FCW, told reporters after the company AGM yesterday.

FCW had acquired the land from its sister company, Goh Ban Huat Bhd, in 2007 for RM86 million cash and subsequently leased it back to GBH for its warehousing needs.

FCW and GBH are associated via major shareholder and chairman Tan Sri Robert Tan Hua Choon, who owns 25% in FCW and 74.3% in GBH.

Given the land's proximity to other prime locations like Mont'Kiara, Jalan Kuching and Jalan Ipoh, investors and market observers have long been expecting its redevelopment.

Thor said the expiration of its leasing agreement with GBH in November had given the group an opportunity to start considering its redevelopment options.

"The plan for redevelopment has always been there since we bought it but it's a matter of timing, when we can maximise the value of the land. Considering the prime location of the land and the proximity to Mont'Kiara and Jalan Kuching, there is great potential for redevelopment," Thor said.

Aside from its investment holding business, the group is also involved in contract manufacturing of toiletries and cosmetic products, which it is also hoping to expand overseas.

"We have already secured contracts with some multinational companies in Indonesia and India and we're looking for more opportunities in other Southeast Asian countries. Currently, about 5% of our manufacturing business consists of exports but we're looking to double that to 10% next year," said Thor.

Based on its 2012 annual report, FCW's contract manufacturing business makes up around 75% of the group's revenue but only contributes around 38% to its earnings. The remaining contributions consist of rental income from its investment property holding business.

For the first quarter ended Sept 30, the group turned around its earnings to post a net profit of RM2.23 million compared to a net loss of RM1.98 million in the same quarter last year. Revenue was up marginally to RM9.5 million.

This story first appeared in The Edge Financial Daily edition of Dec 21, 2012.